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Swiss tax rules lure McDonald’s from UK

By Philip Stafford in London

Published: July 12 2009 20:41 | Last updated: July 12 2009 23:05

McDonald’s is to leave London for Geneva, joining the growing ranks of US companies moving their European headquarters to take advantage of preferential intellectual property tax laws.

The fast-food group, which will open its head office in the Swiss city in the autumn, said the move had been almost a year in the planning.

The Swiss tax regime, particularly for intellectual property, has become increasingly attractive for foreign companies, particularly the regional European headquarters of US multinationals.

Kraft, Procter & Gamble, Google, Electronic Arts and Yahoo have switched from the UK to Switzerland in recent years, while Informa, the UK publisher, is changing its tax domicile to the country.

McDonald’s said its decision was not prompted by changes in the UK taxation of foreign profits from intellectual property rights made by Alastair Darling, the finance minister, this year. However, the company said the move “enables us to conduct the strategic management of key international intellectual property rights, including the licensing of those rights to our franchisees in Europe, from Switzerland”.

McDonald’s has spread much of its operations around six or seven cities in Europe, but its headquarters has long been in London, where it opened its first outlet in 1974.

The growing success of Switzerland, Luxembourg and Ireland at attracting multinationals is causing disquiet in European centres such as London, although the Swiss lifestyle and efficient transport have also been cited as contributing factors behind corporate decisions.

Under the UK tax rules that came into force at the start of the month, McDonald’s would be paying tax on foreign profits relating to intellectual property twice over.

The group, which said its UK business would remain unaffected, also said it expected its overall British annual tax rate to remain unchanged at about 30 per cent.

Several senior members of McDonald’s Europe’s management team will relocate to Geneva, including including Denis Hennequin, president of McDonald’s operations in Europe.

The issue of companies moving their main centre of operations outside the UK has dogged the UK Treasury.

Mr Darling last year bowing to pressure and scrapped reforms to the taxation of foreign profits that threatened to provoke an exodus of companies from the UK.

Since the start of 2008, WPP, Shire, Regus, Henderson, Charter, Beazley, Brit Insurance and UBM have all announced that they are moving their tax base out of the UK.